Madison Mayor Paul Soglin’s mission to save the State Street mall from becoming a Midwestern Bourbon Street took on a new urgency this month when he unveiled plans to place a moratorium on not only new bars, but new coffee houses and restaurants as well.
On March 16, Soglin told members of the city’s Alcohol License Review Committee that he’s about to commission a study to look at how Madison can promote a healthy business mix on the State Street and the Capitol Square. And that means keeping the area’s shrinking number of retail businesses from dwindling further.
But the study could take some time — possibly extending into 2018 — and in the meantime Soglin wants to stanch the bleeding. With several current vacancies and high rents that only deep-pocketed beverage purveyors can afford, he said there’s a need to take immediate action.
“The bottom line of what I’m trying to accomplish is until we get the study done and know what the permanent solution is that there be no further loss of retail in the area,” he told committee members.
He pointed to such recent developments as the replacement of clothing retailer Bop with the beer-focused eatery chain Hopcat, but added, “The issue is beverages. It’s not just alcohol.”
The mayor said that the issue isn’t only State Street and the Capitol Square. While those areas will be the focus of the retail study, the findings of the study could have citywide implications.
“What I have to share with you is of immediate interest regarding State Street,” he said. “But I also want to point out that it may affect some other commercial areas in the city, such as Monroe Street, Williamson Street and perhaps some of the retail on Johnson Street, and as the years go by could extend even further.”
Working to turn Soglin’s moratorium into a formal proposal is his food and alcohol policy director Mark Woulf, who spoke with the Cap Times about the issue.
What will the retail study focus on?
We want to understand the new residents that are moving into all the brand new apartment buildings and condos that have come online in the last several years. What do they want to get out of the street? Residents that are living in other parts of the city that don’t come to State Street, why don't they come? I think that the results of that study will tell us a lot about the demand, how many new restaurants are appropriate, that type of thing.
The mayor has met with several city alders on his proposal to temporarily ban new food and beverage businesses. How was it received?
I think a lot of alders are looking forward to the results of the retail study and the subsequent public discussion about the future of State Street. There is certainly a tension between a few alders and the mayor on whether or not we should succumb to market forces or intervene in some way. There’s a difference of opinion there. But others feel very strongly that we should do what we can to help the retail that we have and to make efforts to try and maintain a healthy business mix.
The city has already tried to limit liquor licenses with the alcohol license density ordinance, which ended in 2014 after seven years, and the current liquor license restrictions on select downtown blocks. But those measures haven’t stemmed the loss of retail. What’s different about the mayor’s current proposal?
It’s a zoning tool, so it’s a little bit different because it’s not just focusing on alcohol licensing. It’s focusing on the use of land overall.
The loss of retail is mainly due to rising rents and the tremendous profitability in selling liquor and other beverages, correct?
Absolutely. Any establishment that serves food and drink, especially those that sell alcohol, have a competitive advantage in the marketplace in that they are able to pay more rent. You can simply get more sales per square foot out of selling alcohol than you can selling shoes or handbags. That’s a problem. I think all retail centers are struggling in the new marketplace with the rise of internet sales and millennials using more services like Amazon. However, we think because of the population base downtown and the draw of the downtown in terms of tourism that there still is a market for storefront bricks-and-mortar retail.
But how can you deal with the larger issue of the retail market’s move to the internet?
Certainly, the internet isn’t going away. That is something that will always be in direct competition with bricks-and-mortar retail. On the other hand, you see even large online retailers start to look at ways they can have more of a brick-and-mortar presence. Amazon just opened a store in the Seattle area. Apple has an incredible online presence and also has many brick-and-mortar stores. Not to say that we need that kind of national retail, but there certainly that type of presence among even the online stores.
Are there properties now at risk of moving from retail to food and drink?
On the 500 block of State Street you have a few vacancies that were former retailers, or at least half of them were retailers. What happens to that whole space? There are three spaces, I think, in a row. Tear down the walls between them and you have one large storefront. Who can go in there as a retailer? Chances are it’ll be no retailer. It will be somebody requesting a liquor license in some format. The concern is State Street becomes just a nighttime destination after 5 or 6 p.m. where you’re only going there for dinner, drinks and maybe limited entertainment.
If high rents are at the root of the problem, what can you do about it?
I think basically through a carrot and stick approach. Our stick is this type of temporary moratorium and then going forward and looking at what type of uses would be allowable permanently on the street. That certainly dictates what landlords can and can’t put into their spaces. That would hopefully balance out some of the disparity in rents. I think in terms of a carrot, we recently adopted a retail program on State Street that allows for improvements.
But some are going to say you’re tinkering with the free market.
We do have to intervene in the marketplace. We’ve already changed the landscape of the marketplace on State Street by creating a pedestrian mall, creating that destination through the tens of millions of dollars over time that have been invested in that street. So it’s become a destination where it may not have otherwise become without that kind of intervention.